Golden oldies may soon rule

This may not be the case for much longer. In 2006 a new European Union law banning discrimination on the basis of age will come into force in the UK. Employment lawyers say investment banks will be directly in the firing line and should bring their recruitment policies into line well before that date to ensure they are not caught out.

Fraser Younson, head of employment law at solicitors McDermott, Will & Emery, says: 'Banks and other financial organisations, who historically have a culture of regarding the over-45s as 'past it', could be significantly affected. There will be the potential for enormous claims based on lost earnings. A man made redundant at 45 could claim 15 years of damages. We are talking claims of millions of pounds.'

Few banks seem to realise the scale of the challenge. At a seminar last month, organised by Sheffield Haworth, the recruitment firm, it emerged that fewer than half the 30 human resources directors of financial services firms in attendance had a diversity initiative of any kind in place, let alone anything to tackle ageism.

Defenders of early retirement argue that it is as much a question of personal as organisational preference. Michael Fletcher of Stork & May, an outplacement firm for senior executives, says: 'Some jobs are just very physically taxing. In areas like corporate finance, the hours are very long, and sustained and intense bursts of activity are required. Only exceptional people can keep that up for 10 or 15 years.'

Unlike other industries, Fletcher says financial services does not offer a natural tapering away to more wisdom-based jobs. 'The very talented, very energetic people can keep going in executive roles, but line roles in investment banking are generally not a comfortable place to spend your older years.'

But with ageism likely to attract the kind of employment tribunal payouts that at the moment are reserved for sex and race discrimination, that could change. There could be more people like Terence Ahern, a stockbroker at Walker Crips Weddle Beck. Ahern is 88.

Ahern says: 'I could have retired 20 years ago but I wanted to keep my brain active. I've also had some clients for more than 30 years and I find it very hard to hand them over to someone else.'

Ahern began his career during the Depression in the 1930s and worked through the rather more recent crashes of 1972, 1987 and 1997. He says he is well placed to advise customers during difficult times. 'Banks rely too much on young analysts instead of experience,' he says.

Ahern plans to relinquish some of his clients and go into semi-retirement later this month. His motivation is not a gentle nudge from his employer, nor is it exhaustion with the work it is commuting. 'Coming in on the train has become troublesome. It takes too much time and is no longer very enjoyable,' he says.

Not many people are likely to follow Ahern's example and work until they are nearly 90. But even organisations that retain staff into their 50s and 60s may be forced to espouse more age-friendly policies, such as homeworking.

In the US, John Challenger of the outplacement firm Challenger, Gray and Christmas, has suggested that people now regarded as pensioners may one day telecommute from 'seniors' centres'.

For the moment, the options for older people made redundant from financial services positions are often restricted to private banking, interim work, or going it alone. Keith Morley, a consultant at the outplacement firm Drake Beam and Morin in London, says working for yourself is increasingly appealing. 'A lot of older bankers don't want to tie themselves to a new company on a full-time basis. They're looking at setting up a business themselves.'

Breaking out on your own can be a daunting prospect. Bruce Tulgan, an American business guru and expert on intergenerational issues, says baby boomers - people born between 1946 and 1964 - hold old-fashioned views about the employer-employee relationship. They expect hierarchy, security, stability and jobs for life. When these illusions are shattered, they can have a hard time bouncing back.

Nevertheless, there are plenty of success stories. One 50-year-old banker who was recently made redundant after spending 25 years in corporate finance at a European investment bank, has set up his own company to advise small to medium-size firms on their business plans. He says: 'It's tough as hell. But I wouldn't go back to working for a big institution. I have a much higher quality of life. I work from home and I see my family a lot more now.'

As 2006 approaches, financial services firms will have to check their instinct to get rid of older staff if they want to stay out of court. Continental Europe is already well prepared: grey hairs command much more respect in Paris and Frankfurt than in London.

There is no reason why the City of London should not undergo a transformation. After all, it has done so once already. 'Before the war you could count the number of women working in the City on one hand. And they were all telephonists,' says Ahern.